This is the blog of David M. Raab, marketing technology consultant and analyst. Mr. Raab is Principal at Raab Associates Inc. The blog is named for the Customer Experience Matrix, a tool to visualize marketing and operational interactions between a company and its customers.

Sunday, March 06, 2016

I spent part of last week at ICON16, Infusionsoft’s annual combination of customer conference, revival meeting, and group therapy session for small business owners. The company made a few announcements, most notably a vastly improved email builder and tighter integration with online accounting software from Quickbooks Online and Xero. These changes were evolutionary at best, but company leaders made clear this was on purpose: their current strategy is to make small improvements to ease of use, not add major new or deeper features. This is based on Infusionsoft’s learning over the past ten years that the main barriers to success with its software are small businesses not knowing what to do with it and not seeing immediate value from the efforts. The real focus of the conference was introducing the latest version of Infusionsoft’s Small Business Success Method, an approach to helping small businesses plan their marketing programs. Infusionsoft’s goal is to bake as much as possible of the methodology into the software, its partner ecosystem, and prebuilt assets such as campaign plans.

This all makes perfect sense and is wholly consistent with Infusionsoft’s historical focus on helping small business grow. Although the company’s growth slowed a bit in 2015 (customers up 30% to 35,000; revenue up 25% to $100 million) CEO Clate Mask said the management has recently committed to a goal of five million customers by 2030. This is certainly audacious – it implies growing 40% per year for 15 years in a business that is highly prone to disruption – but big long-term goals are part of Infusionsoft’s culture. Whether it’s realistic is another question. Some companies serving small business have indeed reached multi-million client counts (see table), but their products cost much less and are essential for basic operations.** Infusionsoft’s challenge is to convince a large fraction* small business owners that their product is also essential.

Infusionsoft managers recognize that expanding the customer base requires making marketing easier. This is a major reason for developing the Small Business Success Method and baking it into the software. Product managers described a plausible glide path from having the system identify opportunities to having it suggest marketing programs to having it execute those suggestions autonomously. Machine intelligence would play a key role at every step of this evolution. Although such work is in early stages at Infusionsoft, the product is being engineered to allow insertion of automated marketing features as these become available. The company seems to be giving lower priority to a more flexible database, which will also be essential to handling future needs such as unstructured data. It is already behind small business oriented competitors that permit custom data tables, including HubSpot and Ontraport. (Infusionsoft does allow custom data fields in its standard tables.)

I still think Infusionsoft could be displaced by an aggressive, well-funded competitor, especially as marketing technologies and methods continue to change.. Infusionsoft argues that their partner network is a competitive barrier that would be hard for another software vendor to overcome. This is true to some extent but Infusionsoft doesn’t dominate among marketing agencies in the way that Intuit Quickbooks dominates among accountants. Nor are many of the tiniest businesses ever going to use a marketing agency. Similarly, Infusionsoft's existing customer base provides invaluable data to help machine intelligence systems make recommendations, but other firms could use data from fewer customers in similar ways. Infusionsoft also argues, I think correctly, that very small businesses are harder to serve than even slightly larger ones, because the smallest business owners have so many other priorities and often so little interest in marketing. This makes channel partners, methodologies, and client support even more important – making Infusionsoft’s head start in experience, methodology, and partner network harder to overcome.

Of course, the only people who really need to worry about Infusionsoft’s business prospects are its investors and employees, although channel partners and clients do have some stake in the results. So let’s move on to the fun stuff, which is technology.

As usual at these conferences, I spent a good chunk of my time cruising the exhibition floor for interesting new vendors. One booth was staffed by attractive young ladies in dark glasses and tight-fitting police uniforms, which literally gave me nightmares. Adding insult to injury, their company provided small business financing, which isn’t even of interest to me.

Among the more relevant firms, I noted a high concentration of reporting tools, including freshlime, hipdash, cloudlink, graphly, and Wicked Reports. These address a recognized gap in Infusionsoft’s own reporting, particularly regarding visualization, custom reports, and integration of external data. Of these, I found WickedReports the most interesting: they use customer tracking to do multi-channel lead attribution and customer value analysis. According to the person I spoke with – who was fortunately not wearing a police uniform – they actually track all contacts with each customer, meaning they have the data to assign fractional credit to each touch using advanced statistical methods. But they don’t expose that data, having judged that Infusionsoft customers aren’t ready for anything so sophisticated. I’m pretty sure they’re right.

Two other vendors also caught my eye. ThinkingChat promised "artificial intelligence lead capture agents" engage site visitors and capture contact information. I was a bit disappointed to find that what they really do is scan for keywords in the chat inquiries, and then provide fixed responses. That's clever but a very low grade of AI at best. Keywords alone have major limits – “price is too high” “price is a bargain” or “what’s your price” would all trigger the same reply if the system simply looks for the word “price”. ThinkingChat adds a bit more flexibility by letting users use a keyword to direct the dialog to different collections of keywords and answers, for example to give prices for different products if a product name is mentioned first.It will also recognize when a visitor is having a problem and admit it can’t answer a question, although the user must manually review the failed dialogs to make refinements. On the other hand, ThinkingChat reports that it more than doubles the rate of capturing contact information on their clients’ Web sites, which is a pretty good deal for as little as $149 per month. So it's worth a look.

My favorite product by far was DilogR, which provides interactive content including assessments, quizzes, and surveys; dynamic videos that let users choose which sections to view; and interactive images. This puts them in competition with firms like SnapApp, ion interactive, Survey Monkey, and Brightcove but at a fraction of the cost: DilogR plans start as low as $97 per month. I think interactive content is an extremely important tool for engaging prospects, but have been frustrated at the time and cost it has taken my own clients to deploy it. DialogR could open this up to many more marketers, providing value for their businesses and customers alike. I'm glad I found it.
____________________________________________________________________________
* There are just over 5 million small businesses in the U.S. with employees plus about 15 million companies with no employees and at least $10,000 revenue. The total market is larger because Infusionsoft can also sell to companies outside the U.S..

** To put this in perspective: five million clients at $3,000 per client would give Infusionsoft $15 billion revenue, ranking it just behind SAP as the worlds fifth-largest software company and nearly three times Salesforce.com's 2016 revenue of $6.67 billion.*** One possible inference is that Infusionsoft would need a much lower-priced offering to reach that many customers. Company managers did seem to be giving this some thought but it would conflict with their strong position that only business owners willing to invest serious time and effort in marketing would succeed with their product.

***Note also that Salesforce.com is just two years older than Infusionsoft; by the time it had reached Infusionsoft's current age, its revenue was already $4 billion. Even if you count from Infusionsoft's first venture capital funding in 2007, Salesforce.com had $500 million revenue at the same age. In other words, Infusionsoft is growing much more slowly than Salesforce.com. That's not surprising: small businesses are slow adopters and Infusionsoft faces more competition than Salesforce ever did. But it's hard to imagine Infusionsoft ever matching Salesforce.com's growth rate.

3 comments:

It'll be interesting to see what their software can do to help small businesses not only the US though. These days when everything is becoming digital, I don't see why company finances won't benefit from a little programming!